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CAUSES OF FAILURE OF SMALL-SCALE INDUSTRIES IN NIGERIA

ABSTRACT

This study is set to investigate the causes of failure in small scale enterprises in Nigeria, with a view to proffer solutions. In every economy there are simple system as well as complex one. At the simple stage of organization, ownership of business is not always distinct form management; this means that supervision of the business is in the hand of the owner. When the scope of business organization increases, it becomes very difficult for one person to co-ordinate, direct and control. At this point, that ownership and management become differentiated. Therefore, it becomes very difficult for the owner to supervise the business enterprise. It will be easier here for management to pursue goals that are different from the objectives set by the owner; which brings about conflicting objectives that can result in business failure. In Nigeria, it will be difficult to believe that a small-scale business enterprise that is owned and managed by the owner can collapse within a twinkle of an eye. Is it as a result of finance, management inefficiency or government policies? This is what the research work is set to uncover. Based on the findings, the researcher concluded that the failure of government in providing a conducive business environment has affected the performance of small scale business also poor management of resources in no small measure has equally affected the growth of small scale business in Nigeria. Therefore, the researcher recommends that government should try as much as possible to provide a stable and conducive environment and hence organization’s should ensure that both human, capital and material resources are effectively utilized.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

In Nigeria various criteria are used for its definition. The small-scale industries in 1973 defines, such enterprise as those having investment capital, (ie land, building, machinery, equipment and working capital of up to N 60,000 and employing not more than 50 persons). But according to the federal ministry of commerce and industry to the Nigeria bank for commerce and industry (NBCI) in 1981/82 (for the purpose of the revolving loan scheme for industries. Such enterprise were regarded as those costing not more than N 500,000) including the cost of land but excluding working capital. At a recent workshop on industries hold at the administrative staff college of Nigeria (ASCON) Badagry, participants agreed that a small-scale industry should be defined as an enterprise whose cost does not exceed N 750,000 (total cost excluding land).

ASCON wants this definition to remain in force until 1990.Therefore, in 1972 the Nigeria enterprise promotions decree otherwise known as

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